The Fair Market Value under rental income is a monthly number. Basically you're saying the monthly rent you charge is typical for the area where your rental property is located.
[revised]
There is another type of FMV related to rental property, which is used to determine the depreciable basis when you convert a property from personal use to a rental. In this case, the Cost of the property is the lesser of:
- The property's Fair Market Value (the amount
a willing buyer would pay and a willing seller would accept when neither is compelled to buy or sell - an "arm's length" transaction) OR
- Your
basis in the asset (how much you've paid for it, including whatever you spent
to acquire it) at the time you started using it for business.
If you need an estimate of Fair Market Value for your property, check with a local Realtor (best choice) or look up similar properties in your area on Zillow.com (may be inflated).
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